Global Automated Fare Collection Market Size, Trades, COVID-19 Impact & Growth By Component (Hardware, Software), By Technology (Smart Card, Magnetic Stripe, Near-field communication (NFC), and Optical Character Recognition (OCR)), By System (Ticket Vending Machine (TVM), Ticket Office Machine (TOM), Fare Gates, and IC Cards), By Application (Railways & Transportation, Parking, Entertainment, and Other Applications), By Region and Companies - Industry Segment Outlook, Market Assessment, Competition Scenario, Trends, and Forecast 2023-2032

Report Overview

The Global Automated Fare Collection Market size is expected to be worth around USD 37.8 Billion by 2032 from USD 11 Billion in 2022, growing at a CAGR of 13.50% during the forecast period from 2023 to 2032.

Introduction

Automated Fare Collection (AFC) refers to the integrated system and technology used for managing and processing fare payments in public transportation systems. It’s designed to streamline the process of fare collection, reduce fraud, improve efficiency, and enhance the overall passenger experience.

Traditionally, fare collection in public transportation systems like buses, trains, subways, trams, and ferries involved manual methods such as purchasing tickets or tokens from ticket booths or vending machines. These methods were often time-consuming, prone to errors, and lacked flexibility. Automated Fare Collection systems are designed to address these challenges by incorporating various technologies to enable seamless and contactless fare payment.

Actual Numbers Might Vary in the Final Report

Key Takeaways:

• In 2022, the global AFC market was valued at approximately US$ 11 billion, and it is expected to grow at a CAGR of 13.5% between 2023 and 2032.
• By Technology, Smart cards held a 31% market share in 2022. NFC technology is projected to grow at a CAGR of 15.1%, offering convenience and security.
• By System, Ticket vending machines (TVMs) held a 31.2% market share in 2022. IC cards are expected to grow at a CAGR of 15.8% due to their multi-payment capabilities.
• By Application, railways and transportation accounted for the highest market share at 41.9% in 2022. AFC is in demand due to increasing travelers and infrastructure development.
• Geopolitical factors and economic recessions can affect AFC providers, but these systems remain essential during economic hardships.
• The AFC market is poised for growth due to urbanization, digital transformation, and the emphasis on passenger experience.
• Trends include contactless payments, integration with smart transportation, biometric authentication, open-loop payment systems, and AI-driven analytics.
• North America dominated the market in 2022, while Asia Pacific is expected to grow the fastest at a CAGR of 16.1%.
• The market is competitive with key players like Cubic Transportation Systems, Thales Group, and Siemens AG among others.

Driving Factors

The increasing urbanization and population density in major cities around the world have led to a rising demand for efficient and seamless public transportation systems. Automated fare collection systems offer a convenient and time-saving way for commuters to pay for their rides, reducing queues and enhancing the overall transit experience. Additionally, governments and transit agencies are increasingly focusing on reducing traffic congestion and promoting eco-friendly modes of transportation, which has led to significant investments in smart transportation infrastructure.

Moreover, technological advancements, including contactless payment methods and mobile ticketing, have further accelerated the adoption of automated fare collection systems. These factors, coupled with the need for improved revenue management and data analytics in the transportation sector, are driving the growth of the global automated fare collection market.

Restraining Factors

The high initial cost of implementing automated fare collection systems

The installation of these systems often requires substantial capital investment, which can deter smaller transit operators or those in developing regions from adopting the technology. Moreover, interoperability issues between different systems and technologies can create barriers to seamless integration across various transportation modes and regions, hindering the universal adoption of automated fare collection.

Data security and privacy concerns also play a role as the collection and storage of passenger information raise questions about data protection and potential misuse. Additionally, resistance to change and the need for extensive employee training within transit agencies can slow down the deployment of automated fare collection systems. Finally, economic downturns or budget constraints can limit the funding available for such infrastructure projects.

Growth Opportunities

The global Automated Fare Collection market is poised for significant growth in the coming years. As urbanization continues to surge worldwide, the demand for efficient and seamless public transportation systems is on the rise. AFC systems, which encompass a range of technologies such as contactless smart cards, mobile payments, and biometric authentication, play a pivotal role in modernizing and streamlining fare collection processes for transit agencies.

Moreover, the ongoing digital transformation and the integration of AFC with intelligent transportation systems are driving the market’s expansion. The COVID-19 pandemic has also accelerated the adoption of touchless payment methods, further propelling the AFC market. With increasing investments in smart city initiatives and transportation infrastructure, the global AFC market is expected to witness robust growth as governments and transport operators strive to enhance passenger experience, reduce fraud, and optimize revenue collection.

Latest Trends

A notable shift towards contactless and mobile-based payment solutions, driven in part by the COVID-19 pandemic’s emphasis on hygiene and convenience. These technologies enable passengers to pay for their fares using smartphones or contactless cards, eliminating the need for physical tickets and reducing the risk of disease transmission.

Additionally, AFC systems are increasingly integrating with other smart transportation technologies, such as real-time passenger information systems and GPS tracking, to provide commuters with more accurate and timely information. Biometric authentication methods like facial recognition and fingerprint scanning are also gaining traction for enhanced security and ease of use.

Furthermore, the adoption of open-loop payment systems, which allow passengers to use existing payment cards or smartphones for fare payment, is becoming more prevalent, making public transit more accessible to a broader audience. Finally, data analytics and artificial intelligence are being harnessed to optimize fare collection processes, reduce fraud, and enhance the overall passenger experience. These trends collectively indicate a dynamic and innovative landscape within the AFC market, poised to shape the future of public transportation.

Component Analysis

This target market is bifurcated into hardware and software in terms of components. Among these, in 2022, the hardware sector held the highest market share, with over 57.0%. The automated fare-collecting hardware system consists of fare gates, ticket vending machines, POS terminals, and electronic validators. The expansion of the market is being driven by the expanding transport and infrastructure developments throughout the developing world as well as the growing government effort to introduce intelligent and automated fare-collecting systems.

For the Cairo monorail in Egypt, for instance, Indra Sistemas SA announced in May 2022 that the company would design, develop, and provide access control systems, ticketing systems, and automatic ticket vending machines with technologies like contactless cards, QR codes, as well as seamless integration of devices like mobile phones.

During the projection period, it is expected that the software segment will expand at a CAGR of 14.9%. By continually processing shared information through a back-end panel, automatic fare-collecting systems enable information transmission and management.

Operators are gaining real-time operational insights, client details, and fee-collecting operations thanks to the increased usage of new technologies like AI, IoT, and machine learning in the construction of robust fare collection systems. Thus, throughout the foreseeable period, the aforementioned advantages will support the segment’s expansion.

Technology Analysis

This target market is classified into smart cards, magnetic stripes, near-field communication, and optical character recognition in terms of technology. Among this, the smart card market sector held a share of around 31.0% for the year 2022. One sort of integrated digital payment option that gives customers options in terms of location, platform, and payment method is the smart card.

It employs chip or magnetic strip technology that may be swiped or read on a variety of platforms to pay for travel tickets, meals at restaurants and motels, online purchases, and other related transactions. The centralized, single payment system gives greater flexibility, makes monitoring payments simple, cuts down on complexity, and improves user experience. Over the projection period, these factors are expected to fuel the segment’s expansion.

During the projection period, the near-field communication (NFC) segment is projected to expand at a CAGR of 15.1%. NFC technology stores customer information or unique tokens that may be connected to a passenger’s account. It creates a seamless link between NFC-capable devices and the consumer’s devices, including smartphones, tablets, and laptops.

By simply linking a user’s virtual wallet stored in their NFC-enabled smartphone to make quicker payments, it eliminates the need to carry cards and cash. Additionally, NFC offers enhanced security and privacy for transactions since it employs a tokenization mechanism rather than storing cards and other private account information. These are a few important variables that are anticipated to fuel segment expansion throughout the projected period.

System Analysis

The system segment is further divided into ticket vending machines, ticket office machines, fare gates, and IC cards.

In 2022, the segment of ticket vending machines (TVM) held a market share of around 31.2%. There is no need for cash transactions with today’s ticket-selling machines. Additionally, it allows payments to be made using credit cards or electronic wallets and provides hassle-free ticket-purchasing procedures.

TVMs shorten the time spent waiting for tickets and continue to be very simple to use while offering round-the-clock accessibility. TVMs can provide various payment alternatives and lower operational expenses for ticketing employees. These are the driving forces behind the following segment’s growth throughout the anticipated timeframe.

During the projection period, the integrated circuit (IC) card sector is projected to expand at a CAGR of 15.8%. IC cards employ cutting-edge technologies, such as powerful integrated IC chips with high storage capacities, to store a lot more information than conventional cards. By storing the user’s payment information on the card itself, IC cards function as a multi-payment system and enable cashless transactions at a variety of locations, including vending machines, metros, and convenience shops. Thus, over the projection period, these benefits will continue to be essential for boosting segment expansion.

Application Analysis

In 2022, the railway & transport segment held the highest market share with 41.9%. Due to the expanding number of travelers worldwide, stricter social distance standards, and increased need for practical and adaptable payment methods, Automated Fare Collection Market is becoming more and more in demand in the railway and transportation industries. A need for sophisticated automated fare collecting is also being driven by the rising expenditures on infrastructure development activities for establishing advanced rail transportation systems, metros, and light trains.

Global Automated Fare Collection Market Segments Includes:

Based on Component

• Hardware
• Software

Based on Technology

• Smart Card
• Magnetic Stripe
• Near-field communication (NFC)
• Optical Character Recognition (OCR)

Based on System

• Ticket Vending Machine (TVM)
• Ticket Office Machine (TOM)
• Fare Gates
• IC Cards

Based on Application

• Railways & Transportation
• Parking
• Entertainment
• Other Applications

Geopolitics and Recession Impact Analysis

The global automated fare collection (AFC) market is subject to the intricate interplay of geopolitics and economic recessions. Geopolitical factors such as trade tensions, regulatory changes, and market access issues can disrupt the supply chain and hinder expansion into new regions for AFC providers. Economic downturns, like recessions, tend to reduce consumer spending and government budgets, affecting the demand and funding for AFC systems.

However, AFC systems, being integral to public transportation, maintain a degree of resilience, as they remain essential even during economic hardships. Technological advancements and a focus on cost-effective solutions can also mitigate recessionary impacts. Regional disparities exist, with some areas being more resilient due to economic diversification and stability. In navigating these challenges, a long-term perspective is crucial for AFC market players to capitalize on eventual market rebounds.

Regional Analysis

In 2022, the Automated Fare Collection Market was dominated by the North American region, which accounted for about 33.5% of the market. This may be ascribed to the area’s modern public transit system, higher adoption costs for cutting-edge technology, extensive internet usage, better connection, and a tech-savvy populace.

The main forces propelling the automated fare-collecting industry’s growth are this and the existence of important companies. For instance, the Port Authority of New Jersey and New York recently announced that it has given Cubic Transportation Systems (CTS) a contract to modernize and provide the Port Authority of Trans-Hudson with a next-generation fare payment system in 2022.

According to the contract, CTS will offer contactless ticket payment methods that enable commuters to “tap and go” using their mobile phones or smart cards. Due to its vast population of travelers, rising investment in infrastructure projects, and the increased government push towards digitalization, Asia Pacific is expected to grow at the quickest rate of any geographical market, with a CAGR of 16.1%. The expansion of the AFC business in the area is also aided by the increasing focus on cashless transactions and the expanding usage of cutting-edge technologies like AI, machine learning, IoT, and 5G.

Key Regions and Countries Covered in this Report:

• North America
  • The US
  • Canada
• Europe
  • Germany
  • France
  • The UK
  • Italy
  • Spain
  • Russia & CIS
  • Rest of Europe
• APAC
  • China
  • Japan
  • South Korea
  • India
  • ASEAN
  • Rest of APAC
• Latin America
  • Brazil
  • Mexico
  • Rest of Latin America
• Middle East & Africa
  • GCC
  • South Africa
  • United Arab Emirates
  • Rest of the Middle East & Africa

Market Share & Key Players Analysis

The global automated fare collection market is highly competitive and fragmented, with a few key players operating in the market. These players focus on expanding their product offerings and strengthening their market image through strategic partnerships.

Market Key Players:

• Advanced Card Systems Ltd.
• Atos SE
• Cubic Transportation Systems
• Indra Sistemas SA
• LECIP Holdings Corporation
• LG Corporation
• Siemens AG
• Thales Group
• Omron Corporation
• Masabi Ltd.
• Nippon Signal
• Other Key Players

Recent Developments:

• The Memphis Area Transit Authority (MATA) and Datamatics, a premier global provider of digital technologies, operations, and experiences, announced their partnership to introduce the GO901 Smart Card System in August 2023. This ground-breaking system, which went into operation on August 21, 2023, revolutionizes transportation in Memphis, Tennessee, by providing commuters with a smooth and convenient travel experience.
• In August 2023, Cubic Transportation Systems (Cubic) announced the launch of its Umo platform as the new automated fare-collecting system for the Salem Area Mass Transit District (SAMTD). Based in the state capital of Oregon, the transit district is locally known as Cherriots. Umo will bring a host of cutting-edge features, including account-based ticketing, contactless payment options, and fare capping to transit riders in the Mid-Willamete Valley.
• The Department of Science and Technology (DOST) and the Department of Transportation (DOTr) partnered to build a validation and testing facility for the automated fare collection scheme (AFCS), which will enhance and benefit mass transit systems nationally.

Report Scope: